Hungary: MNB ready to protect inflation goal

The central bank has the means to intervene if the forint’s weakening endangers either the inflation goal or the country’s financial stability, MNB governor András Simor said on Monday.

Simor made the remarks in response to questions at a press conference following the bank’s decision to leave the key-rate on hold at 8.50%. It is too early to say whether the recent weakening of the forint is temporary or represents a trend, Simor said, adding that the central bank responds only to steady trends.

Macro-economic fundamentals do not justify the forint’s weakening, Simor said. Simor said that the recent measures taken by the MNB to tackle the effects of the current financial turmoil were not aimed at the forint’s exchange rate, but were directed at improving the liquidity of the FX market and the government securities markets.

Simor said he does not believe that foreign-currency debtors are currently in need of rescue, noting that forint rates have undergone greater swings in the past than they have recently and not caused a significant rise in loan repayment installments. The MNB governor added, however, that people must realize that „there is no free lunch.” (MTI–Econews)

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